Vishay Intertechnology, Inc.

Greetings, and welcome to the Vichy Intertechnology first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Peter Henrici, Investor Relations. Thank you, sir. You may begin.

Thank you, Christine. Good morning and welcome to Vichy Intertechnologies' first quarter 2023 earnings conference call. I am joined today by Joel Smackel, our President and Chief Executive Officer, and by Laurie Lipkeman, our Chief Financial Officer. This morning, we reported results for our first quarter. A copy of our earnings release is available in the Investor Relations section of our website at ir.bichet.com. This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded and will be available by replay on our website. During the call, we will be referring to a slide presentation, which we also posted at ir.pichet.com. You should be aware that in today's conference call, we will be making certain forward-looking statements that discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. For a discussion of factors that could cause results to differ, please see today's press release and reshape Form 10-K and Form 10-Q filings with the Securities and Exchange Commission. We are including information in our press release and on this conference call on various GAAP and non-GAAP measures. We have included a full gap to non-gap reconciliation in our press release as well as in the presentation posted on ir.dichet.com, which we believe you will find useful when comparing our gap and non-gap results. We use non-gap measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with gap measures. Now, I turn the call over to President and Chief Executive Officer Joel Smacoff.

Thank you, Peter. Good morning, everyone. Welcome to our first quarter conference call. I'll start my remarks on slide three of the presentation deck. Bichet delivered strong first quarter results with revenue of $871 million, above our high end of the guidance range. We saw continued positive momentum in our sales to automotive, solid demand in industrial, and all-time high sales of specialty products to both medical and aerospace defense market segments. Some details now about these end markets. Automotive, which represents 33% of our total revenue, grew 6.2% versus the fourth quarter, and 9.6% compared to the first quarter of 2022. OEMs in all regions replenish vehicle inventories now that the supply chain constraints are improving. We also saw continued demand for products in support of more electronic content, ADAS features, and greater electric vehicle production. Industrial. This is our largest segment at 37% of total revenues. Sales here were flat versus the fourth quarter and below last year's first quarter. We saw a strong pull through in Europe where we are supporting manufacturing automation and smart infrastructure plus renewable energy collection and transmission. Medical. Medical represents 5% of total revenues. This segment grew 21.4% over the fourth quarter, and we're at an all-time high in Q1, and it is showing increasing promise, particularly in the areas of medical diagnostic equipment and implantable devices. Compared to the first quarter of 2022, medical revenues grew 29.6%. Aerospace and defense, also at an all-time high in Q1. on growth of 10.9% over the fourth quarter and 33.6% over the first quarter last year. Demand for this market, which constitutes 7% of total revenue, is being driven by customers that are supporting many different applications, such as advanced radar systems, missile guidance systems, for the US government and for its allies. We are the leader in supplying passive components on the US military qualified parts list. Looking at the chart in the middle of the slide, it displays revenue mixed by sales channel. OEM revenues increased 6.1%, driven by demand from automotive customers plus our industrial strategic accounts. Distribution revenues were flat. Quarter over quarter, however, POS did grow 6.2%. which was led by Europe. There was a modest growth in the Americas and slightly lower POS in Asia. Distributor inventory at quarter end remained at 19 weeks with an increase in value. EMS revenues declined 7.4% due to some inventory rebalancing, particularly for consumer, computer, and telecom markets, although automotive, industrial, and aerospace defense, as well medical, the demand was strong. At the same time, inside Bechet, we collectively hit the ground running to make the needed changes to make full advantage of these megatrends in connectivity, mobility, and sustainability that are creating new opportunities in our end markets to drive growth and optimize our returns. Across all employees in all locations, we begin to shift our mindset to think customer first. We are keeping our operational quality and product reliability disciplines, but we are placing a priority on having a business-minded focus in everything we do. A greater support to customer design-ins, aggregating customer demand, a multi-year capacity planning approach, setting new business processes, and fostering a change of culture, all of which contribute to developing ambitious growth plans that are grounded in market-based intelligence. In meeting with distributors, OEMs, and EMS, initially many have said, Vishay, you took your limited capacity and went off to support other customers or other channels. They had designed Invaché products but could not get delivery to support their production. I've presented our plans to them to improve our customer engagement, improve our customer service, and prepare our capacity expansions to support their demand. Now they're expressing heightened interest in Invaché to bring this new approach to them quickly. Inside Invaché, not only our senior leaders but All of our employees are energetically embracing this change, accepting the challenge to figure out how to improve their operations, how to improve their customer-facing activities, defining market opportunities, and developing strategic plans to grow, and the tactical steps to execute the plan. This way of change, the new era of Vichet, is spreading quickly throughout the organization. I want to specifically thank the Bechet employees as they join me in this company-wide mission. Their steadfast commitment to excellence and now speed at Bechet is very much appreciated. On last quarter's call, I shared the broad outlines of our three-year plan to drive greater growth and returns. 2023 continues to be a staging year to lay the foundation for Bechet to realize our full potential. We're busy implementing a number of initiatives, addressing the needed change in all customer-facing aspects of our business. I'll give you a progress update on these initiatives after Lori has shared our financial results for the first quarter. Lori?